News | 7 June 2017

Wellington City Council seeks to develop new social and affordable apartments

Mayor Justin Lester has announced that Wellington City Council will seek to partner with developers and community housing providers to redevelop inner-city buildings into new social and affordable apartments.

Speaking to the Community Housing Association Annual Conference, the Mayor announced Council would be working with building owners and community housing providers on developing the new approach.

“Housing is the biggest issue facing our city right now and we need to take bold action. That’s why we’re looking at a new way of providing homes in the central city,” he says.

“We’ll be going out with a request for proposals later in the year. Our approach seeks to convert existing underutilised buildings into new apartments. I expect some will be social housing managed by community housing providers, others will be affordable rentals targeted to the lower end of the market.

“We’ll work with buildings owners and developers who can provide refurbished space. This means we will be able to retrofit existing inner city buildings and turn them into warm, safe, dry apartments.

“This approach is already used by some developers to retrofit buildings into hotels or student accommodation. We want to support this to happen for affordable rental housing.”

The Mayor says that where there is a market failure, the Council will work with building owners to catalyse development including ensuring long-term leases and fast tracked processes for the project.

“Our aim is for more Wellingtonians to be able to afford to live in the heart of our city. We’ll provide more housing options for people who need it, and add vibrancy to our central city.”

Deputy Mayor and Council Housing Portfolio Leader Paul Eagle says the plan is expected to pay for itself over the lifetime of the project.

“We’ll look to partner with Community Housing Providers who could manage the tenancies for social housing and seek to access Income Related Rent support to help people into homes.

“Costs will be dependent on the number of housing units we can get developed under the initiative. But it is expected that the housing provided will be cost neutral for ratepayers in the long-term, as building owners will pay for the refurbishment and tenants will pay for rents.”

“There’s a real need for more good quality, affordable rental accommodation in the city and this plan will make it happen,” he says.

Question and Answers:

What’s the approach?

Council will be seeking requests for proposals from community housing providers and the private sector for partnerships to develop affordable rental and social apartments in the inner city. We will also consider the role that City Housing could play.

Where there are market failings for repurposing of existing buildings into warm, safe, dry apartments, Council will look to provide long-term incentives to make it cost and risk effective, this could include options such as special consenting processes or long-term leases.

The rentals will be targeted towards the affordable end of the market and each apartment complex will include social housing.

Several providers have already used this model for hotels or student accommodation, and we want to repurpose it for affordable and social rentals.

How does it work?

Council will negotiate a market rate with the building owners with fixed inflation-based rental increases so that rentals remain affordable.

It means the building owners are guaranteed long-term tenants of high quality and with an ability to pay. In exchange this will help provide the affordable and social housing the city needs.

For the social housing component, we will work with community housing providers, who can access income related rents. Different developments might include different mixes of social and affordable housing.

Just like with the 750 homes project we announced earlier in the year, this is about building more social housing in mixed developments – so people can feel at home as part of strong communities.

We’ll be looking to develop 1 and 2 bedroom units in buildings above 67% of the National Building Standard for seismic performance.

Why do we need it?

This is an innovative housing solution for a city that is relatively constrained in our ability to grow out – we need to grow up as-well and that means greater intensification in the inner city. Affordable apartments are a great way to do this.

It’s significantly cheaper and faster to repurpose an existing building than it is to find the land and build entirely new apartments.

This adds to the vibrancy of our central city and makes urban living available to more people.

It also helps address another issue in Wellington – the relatively low quality of much of our private rental stock. We’ll be the only Council in the country proactively adding warm, dry, affordable rentals for people in the private market, as well as further increasing the supply of social housing.

This initiative sits alongside the action we’ve already taken on housing – 750 new affordable and social housing units, a $5000 rates rebate for people building their first home, one-stop shop for council consents to speed up the process.

How much does it cost?

Costs will be dependent on the number of housing units we can get developed under the initiative, but it is expected that the housing provided will be cost neutral for ratepayers in the long-term, as building owners would be expected to pay for the fit out and tenants would cover the rent costs.